Security Capital Assurance Ltd 8K - 12/21/06
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
————————————
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): December 21,
2006
————————————
SECURITY
CAPITAL ASSURANCE LTD
(Exact
name of registrant as specified in its charter)
————————————
|
Bermuda
|
001-32950
|
Not
applicable
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
One
Bermudiana Road, Hamilton, Bermuda HM 11
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (441) 292 8515
Not
Applicable
(Former
name or former address, if changed since last report)
————————————
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
December 21, 2006, the Registrant entered into an employment agreement with
Edward B. Hubbard to serve as the President and Chief Operating Officer of
XL
Capital Assurance, Inc., a wholly-owned subsidiary of the
Registrant.
The
employment agreement provides for (i) a specified base salary of not less than
$375,000 and is subject to annual review and may be increased by the
Registrant's Compensation Committee (the "Compensation Committee"), (ii) an
annual bonus pursuant to our incentive compensation plan as determined by the
Compensation Committee with an annual target bonus equal to 150% of his base
salary, (iii) reimbursement for or payment of certain travel expenses, and
(iv)
the right to participate in such other employee or fringe benefit programs
for
senior executives as are in effect from time to time. The original term of
employment is scheduled to expire on the third anniversary of the closing date
of the initial public offering of the Registrant’s common stock and will
continue to be automatically extended for successive one year periods unless
the
Registrant or Mr. Hubbard provides written notice that the term is not to be
extended, as provided in the agreement. Mr. Hubbard has agreed to certain
confidentiality, noncompetition and nonsolicitation provisions. The Registrant’s
obligations under the employment agreement are guaranteed by SCA Holdings US
Ltd
and XL Financial Assurance Ltd.
The
employment agreement for Mr. Hubbard further provides that, in the event of
the
termination of the his employment prior to the expiration date of the employment
agreement (after giving effect to any extensions thereof) by reason of death
or
disability, Mr. Hubbard (or in the case of death, Mr. Hubbard’s spouse or
estate) shall be entitled to receive his then current base salary through the
end of the six month period commencing after the month in which the executive’s
employment is terminated and Mr. Hubbard (or his estate) shall be entitled
to
any annual bonus awarded but not yet paid and a pro rata bonus for the year
of
termination in an amount determined by the Compensation Committee (but not
less
than a pro rata portion of the executive’s average annual bonus for the
immediately preceding three years, or the period of the executive’s employment,
if less). Mr. Hubbard (or Mr. Hubbard’s estate) shall also be entitled to the
executive’s vested accrued benefits under any employee benefit programs,
continued rights with regard to any stock options or other rights with respect
to equity securities of the Registrant held by the executive in accordance
with
the terms of the plans under which such options or other rights were issued,
and
continued medical benefit plan coverage substantially the same for Mr. Hubbard
(in the case of disability) and his immediately family for a period of six
months.
In
the
event of termination of Mr. Hubbard’s employment by the Registrant without Cause
(as defined in the employment agreement), including termination of employment
following the Registrant’s issuance of a notice of nonrenewal of the employment
agreement, or by Mr. Hubbard if he is assigned duties inconsistent with his
position (but such assignment does not constitute “Good Reason” as defined in
the employment agreement), Mr. Hubbard shall be entitled to (i) his then current
base salary through the date on which termination occurs, (ii) provided Mr.
Hubbard executes a general release of claims, a cash lump sum payment equal
to
the sum of (x) two times his then current base salary and (y) one times the
higher of the targeted annual bonus for the year of such termination or the
average of his annual bonus for the three years (or shorter period of
employment) immediately preceding the year of termination, and (iii) any annual
bonus awarded but not yet paid. Mr. Hubbard shall also be entitled to his vested
accrued benefits under any employee benefit programs, continued rights with
regard to any stock options or other rights with respect to equity securities
of
the Registrant held by the executive in accordance with the terms of the plans
under which such options or other rights were issued and continued medical
benefit plan coverage substantially the same for Mr. Hubbard and his immediate
family members for a period of 24 months.
Notwithstanding
the foregoing, in the event of termination of Mr. Hubbard’s employment (x) by
the Registrant without Cause within the 24-month period following a Change
in
Control (as defined in the employment agreement) (the “Post-Change Period”), (y)
by Mr. Hubbard for Good Reason during the Post-Change Period or (z) by the
Registrant (other than for Cause) within one year prior to a Change in Control
and it is reasonably demonstrated that such termination arose in connection
with
or anticipation of the Change in Control, then Mr. Hubbard shall be entitled
to
(i) his then current base salary through the date on which termination occurs;
(ii) a cash lump sum payment equal to the sum of (x) two times the executive’s
base salary and (y) two times the average of the executive’s annual bonus for
the three years (or shorter period of employment) immediately
preceding
the year in which the Change in Control occurs, provided such bonus shall be
at
least equal to the targeted annual bonus for the year of such termination;
and
(iii) an amount equal to the higher of (x) the executive’s annual bonus actually
awarded in the year immediately preceding the year in which the Change in
Control occurs or (y) the targeted annual bonus that would have been awarded
to
the executive for the year of such termination, pro rated by a fraction based
on
the number of months or fraction thereof in which the executive was employed
by
the Registrant in the year of termination. The agreement also provides for
continued medical benefit plan coverage for Mr. Hubbard and his immediate family
for a period of 24 months (which ceases if Mr. Hubbard becomes eligible to
receive medical benefits from another employer) and to accelerated vesting
of
the executive’s rights (i) under any retirement plans and (ii) with regard to
any stock options or other rights with respect to equity securities of the
Registrant held by the executive, which options or other rights shall be
exercisable for the shorter of three years or the original term of the security.
In addition, in the event excise taxes on the executive’s payments or benefits
are imposed under Section 4999 of the United States Internal Revenue Code,
Mr.
Hubbard shall be entitled to gross-up payments.
In
the
event of termination of Mr. Hubbard’s employment by the Registrant for Cause or
other voluntary termination by the executive, Mr. Hubbard shall be entitled
to
his then current base salary through the date on which termination occurs and
continued rights with regard to any stock options or other rights with respect
to equity securities of the Registrant held by the executive in accordance
with
the terms of the plans under which such options or equity securities were
issued. Mr. Hubbard shall also be entitled to his vested accrued benefits under
any employee benefit programs in the case of voluntary termination and, if
such
programs expressly provide for such benefits, in the case of termination by
the
Registrant for Cause.
The
employment agreement also provides for indemnification of the executive by
the
Registrant to the maximum extent permitted by applicable law and the
Registrant’s charter documents and requires the Registrant to maintain
directors’ and officers’ liability coverage in an amount equal to at least
$25,000,000.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: December
27, 2006
SECURITY
CAPITAL ASSURANCE LTD
(Registrant)
By:
/s/
Kirstin Romann Gould
Name:
Kirstin Romann Gould
Title:
Secretary